Reports Successful Acquisition of The Peoples Bank

BIRMINGHAM, Ala., Nov. 06, 2018 (GLOBE NEWSWIRE) -- First US Bancshares, Inc. (Nasdaq: FUSB) (the “Company”) today announced results as of and for the third quarter ended September 30, 2018.  Net income totaled $0.2 million, or $0.03 per diluted share, for the quarter, and was significantly impacted by one-time, nonrecurring expenses of $1.5 million associated with the acquisition of The Peoples Bank.  These one-time expenses were partially offset by nonrecurring gains on the settlement of derivative contracts totaling $1.0 million.  Net income for the third quarter of 2017 totaled $0.6 million, or $0.10 per diluted share.  Earnings during the 2017 period were positively impacted by nonrecurring gains on sale of investment securities totaling $0.2 million.

For the nine months ended September 30, 2018, net income totaled $1.0 million, or $0.15 per diluted share, compared to $1.5 million, or $0.22 per diluted share, for the corresponding period of 2017. 

Acquisition and Merger of The Peoples Bank

As previously announced, on August 31, 2018, the Company completed its acquisition of The Peoples Bank (“TPB”) and then merged TPB with and into its wholly owned subsidiary, First US Bank (the “Bank”).  

“This is an exciting time for our institution,” stated James F. House, President and CEO of the Company.  “We have now added a talented banking team and an excellent customer base in the Knoxville, Tennessee and southwest Virginia areas. We believe that this expansion will provide significant opportunity for future growth, particularly with respect to commercial lending in the vibrant Knoxville market.  As we complete the integration of our organizations and move beyond the nonrecurring acquisition expenses, the acquisition should quickly begin to bring improved efficiency and earnings growth.”

As of the acquisition date, TPB’s assets totaled $166.5 million, consisting primarily of pre-discounted gross loans totaling $156.8 million. Total deposits were $140.0 million.  Preliminary purchase accounting adjustments were recorded as of the acquisition date, resulting in goodwill of $7.6 million.  A table summarizing the assets acquired and liabilities assumed from TPB, along with the purchase accounting adjustments, is included in the financial tables herein.

Other Third Quarter Financial Highlights

Organic Loan Growth – Independent of the loan growth resulting from the acquisition, the Company’s net loan balances increased $9.1 million, or 10.5% (annualized), during the third quarter of 2018 and $18.6 million, or 7.2% (annualized), during the nine months ended September 30, 2018.  Organic loan growth at the Bank totaled $6.9 million for the nine-month period, while the Company’s finance company subsidiary, Acceptance Loan Company, Inc. (“ALC”), grew its loan portfolio by $11.7 million during the same period.

Growth in Net Interest Income – Net interest income increased by $0.8 million, or 11.0%, in the third quarter of 2018 compared to the second quarter of 2018.  Compared to the third quarter of 2017, net interest income increased by $1.2 million, or 16.7%. Net interest income attributable to TPB, including accretion of the fair value discount on purchased loans and premium on time deposits, was $0.7 million.  For the nine months ended September 30, 2018, net interest income exceeded the corresponding period of 2017 by $2.0 million, or 9.6%.

Asset Quality, Provision and Allowance for Loan Losses – Non-performing assets, including loans in non-accrual status and other real estate owned (OREO), increased to $5.3 million as of September 30, 2018, compared to $3.9 million as of June 30, 2018, primarily due to the acquisition of TPB.  As a percentage of total assets, non-performing assets totaled 0.66% as of September 30, 2018, compared to 0.61% of total assets as of June 30, 2018 and 0.96% of total assets as of December 31, 2017.              

The provision for loan and lease losses was $0.8 million during the third quarter of 2018, compared to $0.7 million during the second quarter of 2018 and $0.4 million during the third quarter of 2017.  For the nine months ended September 30, 2018, the provision for loan and lease losses totaled $2.1 million, compared to $1.5 million for the corresponding period of 2017.  The increased provision expense in 2018 compared to 2017 resulted from more substantial loan growth in ALC’s loan portfolio, primarily in indirect point-of-sales lending.  In general, ALC’s consumer loans require higher levels of loss provisioning than the Bank’s commercial loans.  However, as a result of higher credit quality, ALC’s indirect point-of-sale lending has historically required lower provisioning than ALC’s traditional consumer loan portfolio.

As of September 30, 2018, the allowance for loan and lease losses totaled $5.1 million, or 0.97% of gross loans outstanding, representing a decrease from 1.37% as of June 30, 2018 and 1.36% as of December 31, 2017. In accordance with generally accepted accounting principles for acquisition accounting, the loans acquired through the acquisition of TPB were recorded at fair value; accordingly, there was no allowance for loan losses associated with the acquired loan portfolio at the acquisition date.  Management continues to evaluate the need for an allowance on the acquired portfolio, factoring in the remaining net discount on the loans, which totaled $2.3 million, or 1.51% of gross purchased loans, as of September 30, 2018. Management believes that the allowance for loan and lease losses is sufficient as of September 30, 2018 to provide for losses in the existing portfolio.

Non-interest Income – Non-interest income totaled $2.1 million during the third quarter of 2018, compared to $1.1 million during the second quarter of 2018 and $1.2 million during the third quarter of 2017. The increase compared to both previous quarters resulted primarily from the settlement of two forward interest rate swap contracts with the counterparty that netted a pre-tax gain of $1.0 million.  For the nine months ended September 30, 2018, non-interest income totaled $4.4 million, compared to $3.3 million for the corresponding period of 2017.

Non-interest Expense – Non-interest expense totaled $9.1 million for the third quarter of 2018, compared to $7.5 million during the second quarter of 2018 and $7.2 million during the third quarter of 2017.  The increase compared to both previous quarters resulted primarily from expenses associated with the TPB acquisition that totaled approximately $1.5 million during the third quarter of 2018. In addition, salaries and benefits expense increased by $0.1 million compared to the second quarter of 2018 and $0.3 million compared to the third quarter of 2017.  These increases resulted primarily from merit and cost of living salary increases for the Company’s employees, combined with additional expense during the third quarter of 2018 for the assumption by the Bank of salaries and benefits for employees of TPB post-acquisition.  For the nine months ended September 30, 2018, non-interest expense totaled $23.9 million, compared to $21.1 million for the corresponding period of 2017.

Provision for Income Taxes – The provision for income taxes totaled $0.3 million during the third quarter of 2018, representing an effective tax rate of 52.8% for the quarter, compared to an effective tax rate of 18.4% during the second quarter of 2018 and 21.4% during the third quarter of 2017.  The increased tax provisioning during the third quarter of 2018 resulted from the incurrence of acquisition-related expenses during the quarter, a portion of which are non-deductible under IRS regulations.  This resulted in approximately $0.2 million of additional tax expense during the quarter.  For the nine months ended September 30, 2018, the Company’s effective tax rate was 29.8%, compared to 23.0% for the nine months ended September 30, 2017.

Cash Dividend – The Company declared a cash dividend of $0.02 per share on its common stock in the third quarter of 2018. This amount is consistent with the Company’s quarterly dividend declarations for the first and second quarters of 2018 and each quarter of 2017.

Regulatory Capital – As of September 30, 2018, the Bank’s common equity Tier 1 capital and Tier 1 risk-based capital ratios were each 12.28%.  Its total capital ratio was 13.20%, and its Tier 1 leverage ratio was 8.78%.  These ratios are lower than those reported as of June 30, 2018 due to changes in the composition of risk-weighted assets and tangible capital resulting from the acquisition of TPB.  However, throughout the third quarter of 2018 and as of September 30, 2018, the Bank continued to maintain capital ratios at higher levels than the ratios required to be considered a “well-capitalized” institution under applicable banking regulations.

Key Performance Measures – Key quarterly performance measures are provided in the table entitled “Selected Financial Data – Linked Quarters” in this press release.  For the nine months ended September 30, 2018, annualized return on average assets was 0.21%, compared to 0.32% for the corresponding period of 2017. Annualized return on average common equity and tangible common equity were 1.79% and 1.81%, respectively, for the nine months ended September 30, 2018.  For the nine months ended September 30, 2017, both annualized return on average equity and annualized return on tangible equity were 2.50%.  Measures of the Company’s performance were significantly impacted by the nonrecurring items discussed earlier in this press release, including acquisition-related expenses and the settlement of derivative contracts. 

About First US Bancshares, Inc.

First US Bancshares, Inc. is a bank holding company that operates banking offices in Alabama, Tennessee and Virginia through First US Bank.  In addition, the Company’s operations include Acceptance Loan Company, Inc., a consumer loan company, and FUSB Reinsurance, Inc., an underwriter of credit life and credit accident and health insurance policies sold to the Bank’s and ALC’s consumer loan customers. The Company files periodic reports with the U.S. Securities and Exchange Commission (the “SEC”). Copies of its filings may be obtained through the SEC’s website at www.sec.gov or at www.firstusbank.com. More information about the Company and the Bank may be obtained at www.firstusbank.com. The Company’s stock is traded on the Nasdaq Capital Market under the symbol “FUSB.”

Forward-Looking Statements

This press release contains forward-looking statements, as defined by federal securities laws. Statements contained in this press release that are not historical facts are forward-looking statements. These statements may address issues that involve significant risks, uncertainties, estimates and assumptions made by management. The Company undertakes no obligation to update these statements following the date of this press release, except as required by law. In addition, the Company, through its senior management, may make from time to time forward-looking public statements concerning the matters described herein. Such forward-looking statements are necessarily estimates reflecting the best judgment of the Company’s senior management based upon current information and involve a number of risks and uncertainties. Certain factors that could affect the accuracy of such forward-looking statements are identified in the public filings made by the Company with the Securities and Exchange Commission, and forward-looking statements contained in this press release or in other public statements of the Company or its senior management should be considered in light of those factors. Specifically, with respect to statements relating to the sufficiency of the allowance for loan and lease losses, loan demand, cash flows, growth and earnings potential and expansion, these factors include, but are not limited to, the rate of growth (or lack thereof) in the economy generally and in the Bank’s and ALC’s service areas, market conditions and investment returns, the availability of quality loans in the Bank’s and ALC’s service areas, the relative strength and weakness in the consumer and commercial credit sectors and in the real estate markets and collateral values. With respect to statements relating to the Company’s acquisition of TPB, these factors include, but are not limited to, difficulties, delays and unanticipated costs in integrating the organizations’ businesses or realized expected cost savings and other benefits; business disruptions as a result of the integration of the organizations, including possible loss of customers; diversion of management time to address acquisition-related issues; and changes in asset quality and credit risk as a result of the acquisition. There can be no assurance that such factors or other factors will not affect the accuracy of such forward-looking statements.


FIRST US BANCSHARES, INC. AND SUBSIDIARIES
SELECTED FINANCIAL DATA – LINKED QUARTERS
(Dollars in Thousands, Except Per Share Data)

  Quarter Ended  
   2018
 2017  
 September 30,
 June 30,
 March 31, December 31,
 September 30,
                     
                     
Results of Operations:                    
Interest income $  9,452  $  8,390  $  8,119  $  8,087  $  7,820 
Interest expense    1,124   888   805     804     685 
                     
Net interest income  8,328   7,502   7,314   7,283   7,135 
Provision for loan losses  789   702   658   523   373 
                     
Net interest income after provision for loan losses  7,539   6,800   6,656   6,760   6,762 
Non-interest income  2,112   1,132   1,140   1,333   1,236 
Non-interest expense  9,142   7,492   7,301   7,359   7,190 
                     
Income (loss) before income taxes  509   440   495     734   808 
Provision for (benefit from) income taxes  269   81   81     2,600   173 
                     
Net income (loss) $  240  $  359  $  414  $  (1,866) $  635 
                     
Per Share Data:                    
Basic net income (loss) per share $  0.04  $  0.06  $  0.07  $  (0.30) $  0.10 
                     
Diluted net income (loss) per share $  0.03  $  0.06  $  0.06  $  (0.29) $  0.10 
                     
Dividends declared $  0.02  $  0.02  $  0.02  $  0.02  $  0.02 
                     
                     
Key Measures (Period-End):                    
Total assets $  802,595  $634,036  $  627,319  $  625,581  $  614,599 
Tangible assets  793,038   634,036   627,319   625,581   614,599 
Loans, net of allowance for loan losses  519,822   355,529   353,805   346,121   338,026 
Allowance for loan losses  5,116   4,952   4,829   4,774   4,808 
Investment securities, net  159,496   165,740   181,942   180,150   185,802 
Total deposits  715,761   531,428   525,273   517,079   508,385 
Short-term borrowings  192   10,366   10,298   15,594   10,635 
Long-term debt      10,000   10,000   10,000   10,000 
Total shareholders’ equity  77,470   75,634   75,525   76,208   78,854 
Tangible common equity  67,913   75,634   75,525   76,208   78,854 
Book value per common share  12.30   12.41   12.41   12.53   12.98 
Tangible book value per common share  10.79   12.41   12.41   12.53   12.98 
                     
Key Ratios:                    
Return on average assets (annualized)  0.14%  0.23%  0.27%  (1.18%) 0.41%
Return on average common equity (annualized)  1.25%  1.91%  2.21%  (9.38%) 3.21%
Return on average tangible common equity (annualized)  1.30%  1.91%  2.21%  (9.38%) 3.21%
Net yield on interest-earning assets  5.25%  5.31%  5.24%  5.09%  5.11%
Net loans to deposits  72.6%  66.9%  67.4%  66.9%  66.5%
Net loans to assets  64.8%  56.1%  56.4%  55.3%  55.0%
Tangible common equity to tangible assets  8.56%  11.93%  12.04%  12.18%  12.83%
Allowance for loan losses as % of loans  0.97%  1.37%  1.35%  1.36%  1.40%
Nonperforming assets as % of total assets  0.66%  0.61%  0.86%  0.96%  0.94%
                     

FIRST US BANCSHARES, INC. AND SUBSIDIARIES
NET YIELD ON INTEREST-EARNING ASSETS
(Dollars in Thousands)

 Three Months Ended
 Three Months Ended
 September 30, 2018
 September 30, 2017
 Average
Balance
 Interest
 Annualized Yield/
Rate %
 Average
Balance
 Interest
 Annualized Yield/
Rate %
ASSETS                 
Interest-earning assets:                 
Loans – Bank$315,278 $3,859 4.86% $240,006 $2,578 4.26%
Loans – ALC 104,447  4,536 17.23%  91,193  4,224 18.38%
Taxable investment securities 161,560  814 2.00%  187,670  857 1.81%
Non-taxable investment securities 2,217  16 2.86%  8,225  75 3.62%
Federal funds sold 15,102  79 2.08%      
Interest-bearing deposits in banks 30,236  148 1.94%  27,249  86 1.25%
Total interest-earning assets 628,840  9,452 5.96%  554,343  7,820 5.60%
Non-interest-earning assets:                 
Other assets 61,923        58,786      
Total$690,763       $613,129      
                  
                  
LIABILITIES AND SHAREHOLDERS’ EQUITY                 
Interest-bearing liabilities:                 
Demand deposits$156,142 $181 0.46% $164,852 $161 0.39%
Savings deposits 134,673  277 0.82%  82,201  53 0.26%
Time deposits 217,288  662 1.21%  182,405  403 0.88%
Borrowings 5,888  4 0.27%  20,099  68 1.34%
Total interest-bearing liabilities 513,991  1,124 0.87%  449,557  685 0.60%
Non-interest-bearing liabilities:                 
Demand deposits 92,841        77,723      
Other liabilities 7,628        7,282      
Shareholders’ equity 76,303        78,567      
Total$690,763       $613,129      
                  
Net interest income   $8,328       $7,135   
Net yield on interest-earning assets      5.25%       5.11%
                  


FIRST US BANCSHARES, INC. AND SUBSIDIARIES

NET ASSETS ACQUIRED FROM THE PEOPLES BANK
AUGUST 31, 2018
(Dollars in Thousands)

            
 Acquired
from TPB

 Fair Value
Adjustments

 Fair Value as of
August 31, 2018

Assets Acquired:           
Cash and cash equivalents$3,085  $  $3,085 
Investment securities 5,977      5,977 
Federal Home Loan Bank stock, at cost 565      565 
Loans 156,772   (2,395)  154,377 
Allowance for loan losses (1,702)  1,702    
Net loans 155,070   (693)  154,377 
Premises and equipment, net 1,198   17   1,215 
Other real estate owned 85      85 
Other assets 551   (245)  306 
Core deposit intangible    2,048   2,048 
Total assets acquired$166,531  $1,127  $167,658 
            
Liabilities Assumed:           
Deposits 140,033   342   140,375 
Short-term borrowings 10,000      10,000 
Other liabilities 437      437 
Total liabilities assumed 150,470   342   150,812 
            
Shareholders’ Equity Assumed:           
Common stock 1,027   (1,027)   
Surplus 5,280   (5,280)   
Accumulated other comprehensive income, net of tax 17   (17)   
Retained earnings 9,737   (9,737)   
Total shareholders’ equity assumed 16,061   (16,061)   
            
Total liabilities and shareholders’ equity assumed$166,531  $(15,719) $150,812 
            
            
 Net assets acquired
 $16,846 
 Purchase price
  24,398 
 Goodwill
 $7,552 


FIRST US BANCSHARES, INC. AND SUBSIDIARIES

INTERIM CONDENSED CONSOLIDATED BALANCE SHEETS
(Dollars in Thousands, Except Per Share Data)

 September 30,
 December 31,
 2018  2017 
 (Unaudited)
    
ASSETS
Cash and due from banks$  11,809  $  7,577 
Interest-bearing deposits in banks 38,274   19,547 
Total cash and cash equivalents 50,083   27,124 
Federal funds sold 8,561   15,000 
Investment securities available-for-sale, at fair value 137,258   153,871 
Investment securities held-to-maturity, at amortized cost 22,238   26,279 
Federal Home Loan Bank stock, at cost 703   1,609 
Loans and leases, net of allowance for loan and lease losses of $5,116 and $4,774, respectively 519,822   346,121 
Premises and equipment, net 27,120   26,433 
Cash surrender value of bank-owned life insurance 15,158   14,923 
Accrued interest receivable 2,444   2,057 
Goodwill and core deposit intangible, net 9,557    
Other real estate owned 1,489   3,792 
Other assets 8,162   8,372 
Total assets$  802,595  $  625,581 
        
LIABILITIES AND SHAREHOLDERS’ EQUITY
Deposits$  715,761  $  517,079 
Accrued interest expense 355   381 
Other liabilities 8,817   6,319 
Short-term borrowings 192   15,594 
Long-term debt    10,000 
Total liabilities 725,125   549,373 
        
Shareholders’ equity:       
Common stock, par value $0.01 per share, 10,000,000 shares authorized;       
7,560,914 and 7,345,946 shares issued, respectively; 6,296,712 and 6,081,744 shares outstanding, respectively 75    73 
Surplus 13,385   10,755 
Accumulated other comprehensive income (loss), net of tax (2,882)  (868)
Retained earnings 87,317   86,673 
Less treasury stock: 1,264,202 shares at cost (20,414)  (20,414)
Noncontrolling interest (11)  (11)
Total shareholders’ equity 77,470   76,208 
        
Total liabilities and shareholders’ equity$  802,595  $  625,581 
        


FIRST US BANCSHARES, INC. AND SUBSIDIARIES

INTERIM CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Dollars in Thousands, Except Per Share Data)

 Three Months Ended
 Nine Months Ended
 September 30,
 September 30,
  2018  2017  2018  2017
  
 (Unaudited)
Interest income:           
Interest and fees on loans$  8,395 $  6,802 $  22,815 $  19,928
Interest on investment securities 1,057  1,018  3,146  3,085
Total interest income 9,452  7,820  25,961  23,013
            
Interest expense:           
Interest on deposits 1,120  617  2,619  1,713
Interest on borrowings 4  68  198  189
Total interest expense 1,124  685  2,817  1,902
            
Net interest income 8,328  7,135  23,144  21,111
            
Provision for loan and lease losses 789  373  2,149  1,464
            
Net interest income after provision for loan and lease losses 7,539  6,762  20,995  19,647
            
Non-interest income:           
Service and other charges on deposit accounts 489  481  1,400  1,406
Credit insurance income 198  160  516  459
Net gain on sales and prepayments of investment securities   178  105  228
Net gain on settlement of derivative contracts 981    981  
Mortgage fees from secondary market 128  89  389  147
Other income, net 316  328  993  1,093
Total non-interest income 2,112  1,236  4,384  3,333
            
Non-interest expense:           
Salaries and employee benefits 4,643  4,370  13,743  13,048
Net occupancy and equipment 983  806  2,745  2,276
Computer services 328  337  937  1,036
Fees for professional services 242  187  781  650
Acquisition expenses 1,492    1,492  
Other expense 1,454  1,490  4,237  4,080
Total non-interest expense 9,142  7,190  23,935  21,090
            
Income before income taxes 509  808  1,444  1,890
Provision for income taxes 269  173  431  435
Net income$  240 $  635 $  1,013 $  1,455
Basic net income per share$  0.04 $  0.10 $  0.17 $  0.24
Diluted net income per share$  0.03 $  0.10 $  0.15 $  0.22
Dividends per share$  0.02 $  0.02 $  0.06 $  0.06
            

Non-Generally Accepted Accounting Principle (GAAP) Financial Measures

In addition to the GAAP financial results presented in this press release, the Company’s management believes that certain non-GAAP financial measures and ratios are beneficial to the reader.  These non-GAAP measures have been provided to enhance overall understanding of the Company’s current financial performance and position. Management believes that these presentations provide meaningful comparisons of financial performance and position in various periods and can be used as a supplement to the GAAP-based measures presented in this press release. The non-GAAP financial results presented should not be considered a substitute for the GAAP-based results.  Management believes that both GAAP measures of the Company’s financial performance and the respective non-GAAP measures should be considered together.

The non-GAAP measures and ratios that have been provided in this press release include measures of operating income, tangible assets and equity, and certain ratios that include tangible assets and equity.  As discussion of these measures and ratios is included below, along with reconciliations of each relevant non-GAAP measure to GAAP-based measures included in the financial statements previously presented in the press release.

Operating Income
Operating income is a non-GAAP financial measure that adjusts net income for the following non-operating items:

  • Provision for (benefit from) income taxes
  • Gains (losses) on sales and prepayments of investment securities
  • Gains (losses) on settlements of derivative contracts
  • Gains (losses) on sales of foreclosed real estate
  • Provision for loan and lease losses
  • Acquisition expenses
  • Accretion of discount on purchased loans
  • Accretion of premium on purchased time deposits
  • Amortization of core deposit intangible asset

A reconciliation of the Company’s net income to its operating income for each of the most recent five quarters as of September 30, 2018 is set forth below.  A limitation of the non-GAAP financial measures presented below is that the adjustments include gains, losses or expenses that the Company does not expect to continue to recognize at a consistent level in the future; the adjustments of these items should not be construed as an inference that these gains, losses or expenses are unusual, infrequent or nonrecurring.

 Quarter Ended
  2018  2017
 September 30,
 June 30,
 March 31,
 December 31,
 September 30,
                    
                    
Net income (loss)$  240  $  359  $  414  $  (1,866) $  635 
Add back:                   
Provision for (benefit from) income taxes 269   81   81   2,600   173 
                    
Income before income taxes 509   440   495   734   808 
Add back (subtract) adjustments to net interest income:                   
Accretion of discount on purchased loans (77)            
Accretion of premium on purchased time deposits (59)            
                    
Net adjustments to net interest income (136)            
Add back (subtract) non-interest adjustments:                   
Net gain on sales and prepayments of investment securities    (102)  (3)  (1)  (178)
Net gain on settlement of derivative contracts (981)            
Net loss (gain) on sales of foreclosed real estate (79)  152   (51)  27   196 
Provision for loan and lease losses 789   702   658   523   373 
Amortization of core deposit intangible 43             
Acquisition expenses 1,492             
                    
Net non-interest adjustments 1,264   752   604     549   391 
                    
Operating income$  1,637  $  1,192  $  1,099  $  1,283  $  1,199 
                    

Tangible Balances and Measures

In addition to capital ratios defined by GAAP and banking regulators, the Company utilizes various tangible common equity measures when evaluating capital utilization and adequacy.   These measures, which are presented in the financial tables in this press release, may also include calculations of tangible assets. As defined by the Company, tangible common equity represents shareholders’ equity less goodwill and identifiable intangible assets, while tangible assets represent total assets less goodwill and identifiable intangible assets.  

Management believes that the measures of tangible equity are important because they reflect the level of capital available to withstand unexpected market conditions.  In addition, presentation of these measures allows readers to compare certain aspects of the Company’s capitalization to other organizations.  In management’s experience, many stock analysts use tangible common equity measures in conjunction with more traditional bank capital ratios to compare capital adequacy of banking organizations with significant amounts of goodwill or other intangible assets that typically result from the use of the purchase accounting method in accounting for mergers and acquisitions.

These calculations are intended to complement the capital ratios defined by GAAP and banking regulators.  Because GAAP does not include these measures, management believes that there are no comparable GAAP financial measures to the tangible common equity ratios that the Company utilizes.  Despite the importance of these measures to the Company, there are no standardized definitions for the measures, and, therefore, the Company’s calculations may not be comparable with other organizations.  In addition, there may be limits to the usefulness of these measures to investors. Accordingly, management encourages readers to consider the Company’s consolidated financial statements in their entirety and not to rely on any single financial measure.  The table below reconciles the Company’s calculations of these measures to amounts reported in accordance with GAAP.

   Quarter Ended
 Nine Months Ended
    2018  2017  2018  2017 
   September 30,
 June 30,
 March 31,
 December 31,
 September 30,
 September 30,
 September 30,
                              
                              
TANGIBLE BALANCES                             
Total assets  $  802,595  $  634,036  $  627,319  $  625,581  $  614,599         
Less: Goodwill   7,552                     
Less: Core deposit intangible   2,005                     
                              
Tangible assets(a) $  793,038  $  634,036  $  627,319  $  625,581  $  614,599         
                              
Total shareholders’ equity  $  77,470  $  75,634  $  75,525  $  76,208  $  78,854         
Less: Goodwill   7,552                     
Less: Core deposit intangible   2,005                     
                              
Tangible common equity(b) $  67,913  $  75,634  $  75,525  $  76,208  $  78,854         
                              
Average shareholders’ equity  $  76,303  $  75,447  $  75,824  $  78,960  $  78,567  $  75,858  $  77,931 
Less: Average goodwill   2,517               839    
Less: Average core deposit intangible   676               225    
                              
Average tangible shareholders’ equity(c) $  73,110  $  75,447  $  75,824  $  78,960  $  78,567  $  74,794  $  77,931 
                              
Net income(d) $  240  $  359  $  414  $  (1,866) $  635  $  1,013  $  1,455 
Common shares outstanding(e)  6,297   6,092   6,087   6,082   6,077         
                              
TANGIBLE MEASUREMENTS                             
Tangible book value per common share(b)/(e) $  10.79  $  12.41  $  12.41  $  12.53  $  12.98         
                              
Tangible common equity to tangible assets(b)/(a)  8.56%  11.93%  12.04%  12.18%  12.83%        
Return on average tangible common equity (annualized)(1)  1.30%  1.91%  2.21%  (9.38%)  3.21%  1.81%  2.50%
                              
  1. Calculation = ((net income (d) / number of days in period) * number of days in year) / average tangible shareholders’ equity (c)

  

Contact:
Thomas S. Elley
205-582-1200